CANADA FX DEBT-C$ slides as NAFTA talks weigh

* Canadian dollar at C$1.2676, or 78.89 U.S. cents

* Bond prices higher across a flatter yield curve

* Canada's 10-year yield hits a 1-month low at 2.21 percent

(Adds comment, bylines, updates prices) TORONTO/NEW YORK, Feb 26 (Reuters) - The Canadian dollar weakened against the greenback on Monday as investors weighed talks to revamp a North American trade pact. The Canadian currency, also called the loonie, has fallen in six of the last seven sessions, as the U.S. dollar staged a rally that propelled it from a three-year low hit more than a week ago. Mexico and Canada aim to finish reworking less contentious chapters of the North American Free Trade Agreement with the United States in new talks that began on Sunday, hoping to clear the path for a breakthrough on the toughest issues before upcoming elections. Canada sends about 75 percent of its exports to the United States. Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto, believes that in acknowledging the risk posed by a potential collapse of the NAFTA agreement, and setting out a game plan for dealing with the potential consequences, Canadian Finance Minister Bill Morneau could act to reduce the risk premium currently attached to the Canadian dollar. At 3:39 p.m. EST (2039 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.2676 to the greenback, or 78.89 U.S. cents. The currency pair traded in a range of C$1.2615 to C$1.2682. On Thursday, the Canadian dollar touched its weakest in two months. Speculators cut bullish bets on the Canadian dollar for the second straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Feb. 20, net long positions had fallen to 23,127 contracts from 32,529 a week earlier. Figures for Canada's fourth-quarter economic growth will be released on Friday, with analysts expecting the annualized rate to come in below the Bank of Canada's 2.5 percent forecast. "Fridays December gross domestic product number could be more meaningful, setting the stage for another adjustment in interest rate expectations," said Cambridge's Schamotta.

The U.S. dollar was little changed against a basket

of major currencies ahead of Federal Reserve Chairman Jerome Powell's first congressional testimony on Tuesday. Canadian government bond prices were mixed across the yield

curve, with the two-year down 2 Canadian cents to yield 1.794 percent and the 10-year flat to yield

2.247 percent. The Canadian government will release its latest federal budget on Tuesday. Markets will get updated forecasts on the size of the deficit and will look for any planned return to balance.

(Reporting by Fergal Smith in Toronto and Gertrude Chavez-Dreyfuss in New York; Editing by David Gregorio and James Dalgleish)